Square Capital, now rebranded as Square Loans, offers a streamlined and flexible approach to small business financing. As part of the broader Square ecosystem, which includes payment processing, point-of-sale systems, and financial services, Square Loans is designed specifically for businesses that already use Square’s services. This integration allows for a seamless experience from application to repayment, providing businesses with quick access to the funds they need to grow.
| IncBook: Key Terms & Conditions of Square Loans | Details |
|---|---|
| Minimum Loan Amount | $300 |
| Maximum Loan Amount | $250,000 (subject to approval based on sales volume) |
| Loan Fee | One-time fixed fee, determined at the time of the offer; no additional interest |
| Repayment Structure | A fixed percentage of daily sales, with a minimum payment of 1/18th of the loan amount every 60 days |
| Repayment Period | Up to 18 months, depending on sales volume and repayment speed |
| Prepayment Penalty | No penalty for early repayment |
| Collateral Requirement | No collateral required |
| Credit Score Impact | No impact on credit score |
| Application Process | Entirely online via the Square Dashboard; typically takes only a few minutes |
| Funding Time | Funds are typically deposited the next business day after approval |
Overview of Square Loans
Square Loans provides an alternative to traditional bank loans, offering fast and straightforward access to capital. Unlike traditional lenders that require extensive paperwork, business plans, and credit checks, Square Loans bases its loan offers on your payment processing history with Square. This allows businesses to avoid the often lengthy and complex process of securing a loan from a bank.
Here are some key features of Square Loans:
- Eligibility: Only available to businesses that process payments through Square. Loan offers are automatically generated based on your transaction history, making the process quick and easy.
- Loan Amounts: Loans range from $300 to $250,000, depending on your sales volume and other business metrics.
- Fixed Fees: Instead of charging interest, Square charges a fixed fee for the loan, which is clearly outlined when the loan offer is made. This fee remains constant regardless of how quickly you repay the loan.
- Repayment: Repayment is made through a fixed percentage of your daily card sales, meaning that on slower days, you pay less. The repayment process is automatic, deducting from your sales until the loan is fully repaid. However, at least 1/18 of the loan balance must be repaid every 60 days.
- Speed: Upon acceptance of a loan offer, funds are typically deposited into your account by the next business day.
Advantages of Square Loans
- Simplicity and Speed: The application process is minimal, often taking just a few minutes. Most applicants receive a decision instantly, and funds are deposited as soon as the next day.
- No Credit Impact: Applying for a Square Loan does not impact your personal or business credit score, as the offer is based on your Square transaction history.
- Flexible Repayment: Repayment adjusts with your sales, offering flexibility that traditional loans do not. This structure is particularly beneficial for businesses with fluctuating sales volumes.
- No Collateral Required: Square Loans do not require collateral, so you don’t need to put up personal or business assets to secure funding.
Example Use Cases
Square Loans can be used for various business needs, such as:
- Expanding Inventory: Purchase additional stock to meet customer demand.
- Upgrading Equipment: Invest in new tools or technology to improve efficiency.
- Managing Cash Flow: Cover operational expenses during slower seasons.
- Hiring Staff: Expand your team to support business growth.
| IncBook: Loan Requirements & Eligibility Criteria | Details |
|---|---|
| SBA Loans | Minimum 10% equity injection, must meet SBA size standards, typically requires a personal guarantee, and collateral may be required. |
| Commercial Loans | Business financial statements, collateral (e.g., real estate), personal guarantee, and credit history. Must demonstrate the ability to generate income. |
| Equipment Loans | Quotes for the equipment, business financial statements, collateral (usually the equipment itself), and good credit history. |
| Working Capital Loans | Short-term financial statements, proof of consistent revenue, creditworthiness, and sometimes collateral. |
| Business Lines of Credit | Strong credit history, ongoing financial statements, proof of revenue, and collateral for larger credit lines. |
| Real Estate Loans | Real estate appraisals, business financials, proof of ability to repay, and typically 20% down payment required. |
Links
Square Loans Overview
- URL: https://squareup.com/us/en/loans
- Description: This page provides an overview of Square Loans, explaining how the loan process works, the benefits of using Square Loans, and how it compares to traditional lending options. It’s a great starting point for understanding what Square Loans offers.
Square Loans Support Center
- URL: https://squareup.com/help/us/en/article/5654-get-started-with-square-capital
- Description: This support article details how to get started with Square Loans, including the application process, loan terms, and repayment options. It’s useful for both new and existing Square users looking to apply for a loan.
Square Capital Press Release
- URL: https://squareup.com/us/en/press/capital-loans
- Description: This page discusses the transition of Square Capital from a merchant cash advance product to a more flexible loan product. It includes insights into the development of the product and its benefits for small businesses.
Square Loans FAQ
- URL: https://squareup.com/help/us/en/article/5678-square-loans-faq
- Description: The FAQ page provides answers to common questions about Square Loans, such as eligibility, loan amounts, fees, repayment, and the impact on credit scores. It’s a comprehensive resource for anyone considering a loan from Square.
Square Loans Eligibility Information
- URL: https://squareup.com/help/us/en/article/5680-square-loans-eligibility
- Description: This page explains the criteria used to determine eligibility for Square Loans, including factors such as payment processing volume and account history. It’s essential for understanding what it takes to qualify for a loan through Square.
